If you are looking out for the biggest ongoing trend in the cryptocurrency world in today’s world, then you may have come across a word called as “ICOs.” The word ICOs has been all on the rage lately. But what exactly does that word mean? Well, ICOs is a short form for the term “Initial Coin Offerings.” ICO is unregulated means of generating funds for a new cryptocurrency venture.
It is often referred to as ‘crowdsale’ or ‘initial public offering’. To understand ICOs in a better way, we can say that it is a fundraising method used by a firm to attract the attention of investors who want to release digital currency in exchange for bitcoin typically. In the recent days, many of the startup companies are launching their very own ICOs to stand a chance to generate millions of dollars for their projects through the use of cryptocurrency.
Although many of the companies have their success stories, investing in ICOs is not as straightforward as it seems. Finding a success story in ICO may be difficult for you. Sadly, there are very low percentages of ICOs that are feasible and have a bright future.
Besides, there are high chances that the investors may lose their money due to some marketing gimmicks or a scam. However, this does not imply that all the ICOs out there are scams or may fail but some of them will fail at some time in the future.
ICOs are new type industry and finding a genuine and successful ICO may prove to be difficult for you initially. ICOs come along with many risks which make them stand out and different from an IPO that you will find in the stock market. So if you have decided to take a chance in investing in initial coin offerings, then you should consider and keep in mind the five tips mentioned below:
- Find out everything possible about the development team
The first thing that you will have to ensure is to look into the team behind the development. Thoroughly go through, the website and investigate so you can know where most the ICOs are filtered. So log on to the website and look at the about page option, and make a note of the names and photos of all the developers, advisors, executives. A genuine and serious ICO campaign will surely have a good amount of data mentioned by the team on the website.
Besides, you should also be able to spot links to social profiles such as Facebook, LinkedIn or Twitter of the team member. However do not stop just here, to grasp the quality of the team members you should check out their profiles and go through the projects they have done before the ICO and the success they have achieved.
If you get a feeling that something is not right then do not move ahead unless all of your doubts get cleared. If you happen to run into an ICO website that comprises an anonymous team or has very less information, then please stay away from it at any cost. No matter how well everything looks on the website, if the members working there are not efficient and capable enough, then you are surely going to face a big threat later.
- Scan and watch out for the Bitcoin Talk Forum
You should always make it a point to keep an eye on the first announcement which is made on the several channels about their ICO. You can find most of the ICO related announcements on the Bitcointalk.org forum which is a hub for all ICOs. Make a note of the ICOs in which you have an interest and read the comments of the people mentioned in the thread.
Scan the section and check for the ICO post you are interested in. Look out for the actual comments of the people instead of the irrelevant stuff posted in the thread. Sometimes, there is a lot of fake information posted in the thread, so it is best to check for the comments made by reputable members.
Check for the questions that have been answered correctly by the development team. Also, keep a constant lookout for terms such as scam, MLM and other red flag terms. While you are going through the ICOs Bitcoin Talk Thread, you will get a brief idea and possible some helpful discussions as well that can help you to understand the project in a better way.
- Read and go through the whitepaper
It is mandatory for every ICO to release a whitepaper, which contains detailed information on the project, starting from the idea to the technical execution. Often these whitepapers are filled with information that may seem to be impressive to the people who are new the world of ICO, but you should, however, star alert and check the information correctly and ask as many questions as possible. Some things which you will have to watch out for include the following:
- Names of the development team.
- The basic idea should be presented clearly.
- Who are the existing competitors?
- The proof of how technical description will be executed.
- How the token or coin getting distributed can be used?
- The sum of money which can be raised and what can be done with it?
- A brief on future endeavours and developments.
- Cryptocurrency Industry Needs to Work With Regulators
So if you do not understand the above-mentioned things, you cannot possibly move ahead and invest in any ICO. It is very important for you to understand that no ICO project will make you rich overnight unless there is some of the actual potential and the team working behind can make the vision turn into a reality. You will read about many things which are good for investing in an ICO, and some information you read will sound too realistic. However, remember that if you find something to be amiss, then you can always pull out.
- Go through the community
Most of the ICOs now have their community hubs on famous social platforms like Telegram, Slack and others. The community support is the key factor for the success of ICO. So ensure that go through the communities and check the conversations. An active development team will ensure that all the updates are shared on a regular basis so that you are well informed about the defined roadmap of the ICO. This is also the right time where you can shoot in your questions and clear all of your doubts if you have any related to the project. Again, ensure that you do not pay any heed to the irrelevant information or false hype posted.
- Don’t put everything at risk and refrain from selling at the very first opportunity
These are two most important advices for the price of just one. For instance, you may be all ready to invest in an ICO after doing all the research work. At this time, most people keep high hopes of being successful. However, that is a huge mistake in the very beginning itself. Although the ICO may be big, still there is a chance that it may not provide you with the things that it had promised for.
In such a case, you will be at a huge loss and will have wiped yourself out in all ways. In such an unpredictable and volatile market, you just can’t afford to put everything you have at risk. So if you want to be successful in investing in initial coin offerings, then you will have to get over and live through a rough patch. So always stay prepared as there will be plenty of rough patches you will be facing.
This being said, if everything is in your favour and when you that the token prices are rising then do not just go and sell them at the very first opportunity. If you have already thought about taking the risk, then take some time. Don’t ever be in a rush and wait for the perfect opportunity to come in the future.
Hence, there are the tips which you should surely consider while you analyse an ICO.
At the end of it all, while you learn how to invest in cryptocurrency, you will realise that:
- Cryptocurrency and ICO are a gamble most of the time.
- Always make an investment at which you are not at a loss later and can afford to lose.
- As ICO is a risky investment, you should never use or borrow credit to invest in it.
- You should ensure that you know the guidelines and rules set for a particular ICO in which you are interested in investing in.
- Make use of decentralised wallet such as Trust and refrain from using centralised wallet like Coinbase to protect your private key.
Therefore, to stay on a safer side, always look forward to a mature and stable ICO market which consists of legitimate companies that provide legitimate products.